Texas Real Estate Finance - Chp 4 - The Secondary Mortgage Market
Which of the following is paid on FHA insured loans where the borrower puts down a minimum down payment...? AMIP BPMI CADA DARM
MIP (Mortgage Insurance Premium)
Goal of secondary mortgage market
assist the primary market by keeping funds available to the primary market
Adjustable Rate Mortgage (ARM) -
A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise.
Conforming Loan -
Those loans processed on uniform loan forms according to FNMA/FHLMC guidelines. (Fannie and Freddie)
The criteria with which a lender determines the credit worthiness in order to qualify them for the loan is referred to as...? AUnderwriting BAppraising CQuantifying DSubsidizing
Underwriting
Conventional Loan
- A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. This type of loan is customarily made by a bank or savings and loan association.
Negative Amortization
- Occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due.
Credit Score -
A number assigned to a person that indicates to lenders their capacity to repay a loan.
LTV (Loan to Value)
percentage- ratio of loan/smaller of sale price or appraised value- in conventional LTV=80%
Underwriting
- The criteria with which a lender determines the credit worthiness in order to qualify them for the loan.
Primary Mortgage Market
- The marketplace whereby loans are originated.
Secondary Mortgage Market
- The marketplace whereby the loans that were originated in the primary mortgage market are bought and sold.
Non-conforming Loan -
A loan that does not meet the guidelines of Government Sponsored Enterprises (GSE), such as Fannie Mae or Freddie Mac.
Fixed Interest Rate Loan -
A loan where the interest rate does not fluctuate during the term of the loan.
Jumbo Loan -
A loan whose amount is above conventional conforming loan limits set by Fannie Mae and Freddie Mac.
Freddie Mac -
A nickname for Federal Home Loan Mortgage Corporation (FHLMC), a corporation wholly owned by the Federal Home Loan Bank System that purchases FHA, VA, and conventional mortgages.
A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise, is known as a/an...? Adjustable Rate Mortgage Fixed Interest Rate Loan Term Loan Straight Loan
Adjustable Rate Mortgage
Fannie Mae (FNMA)
An acronym nickname for Federal National Mortgage Association (FNMA), a privately owned corporation that purchases FHA, VA, and conventional mortgages.
MIP (Mortgage Insurance Premium)
Charged up-front and annually (in each monthly loan payment) by FHA to insure the lender against default on that portion of a loan above the borrower's equity. (Does not go away)
Which of the following operates in the primary mortgage market...? Commercial banks Fannie Mae Freddie Mac Ginnie Mae
Commercial banks
Loans processed on uniform loan forms according to FNMA/FHLMC guidelines are known as...? Conforming loans Conventional loans Non-conforming loans Private loans
Conforming loans
A mortgage made without governmental underwriting is referred to as a/an...? AConventional loan BUnconventional loan CFHA insured loan DVA loan
Conventional loan
This is a number assigned to a person that indicates to lenders their capacity to repay a loan...? Credit score Underwriting score Loan estimate score Financial score
Credit score
Conforming loans must meet the guidelines of...? FDIC Wall street Fannie Mae RESPA
Fannie Mae
This is a privately owned corporation that purchases FHA, VA, and conventional mortgages...? Freddie Mac Fannie Mae Farmer Mac Ginnie Mae
Fannie Mae
Which of the following operates in the secondary mortgage market...? Fannie Mae Freddie Mac Ginnie Mae All of the above
Fannie Mae Freddie Mac Ginnie Mae All of the above
Freddie Mac is also known as the...? Government National Mortgage Association Federal National Mortgage Association Federal Home Loan Mortgage Corporation Federal Housing Finance Association
Federal Home Loan Mortgage Corporation
A loan where the interest rate does not fluctuate during the term of the loan is known as a...? AFixed Interest Rate Loan BARM CVariable Rate Loan DDynamic Rate Loan
Fixed Interest Rate Loan
Major participants in the secondary market are...
Freddie Mac, GNMA, FNMA, FHLB (Federal Home Loan Bank), Federal Agriculture Mortgage Corporation (FAMC), Private Mortgage Investors
This is a U.S. government agency that purchases FHA and VA mortgages...? FDIC HUD Farmer Mac Ginnie Mae
Ginnie Mae
PMI (Private Mortgage Insurance)
Insurance that protects the lender in case the borrower defaults and is unable to repay the loan. Generally a borrower must pay PMI if their equity is less than 20% of the home's value.
A loan whose amount is above conventional conforming loan limits set by Fannie Mae and Freddie Mac is known as a...? ARM Commercial loan Term loan Jumbo loan
Jumbo loan
The secondary mortgage market offers ...........for the primary mortgage market? Loans Insurance Liquidity Warranties
Liquidity
This occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due...? ANegative amortization BAmortization CVariable balance DReverse amortization
Negative amortization
FHFA (Federal Housing Finance Agency)
On September 7, 2008 this agency placed Fannie Mae and Freddie Mac in Conservatorship. Appoint (blank) as a conservator or receiver of the GSE (Government Sponsored Entities)
Justin obtained a mortgage from his local bank in order to purchase a new house. Justin was operating in the...? Primary mortgage market Secondary mortgage market Front-end mortgage market Back-end mortgage market
Primary mortgage market
The marketplace whereby the loans that were originated in the primary mortgage market are bought and sold is known as the...? Front-end mortgage market Secondary mortgage market Back-end mortgage market Stock market
Secondary mortgage market
Ginnie Mae -
a nickname for Government National Mortgage Association (GNMA), a U.S. government agency that purchases FHA and VA mortgages
